Osteoarthritis (OA) leads to the progressive degeneration of articular cartilage, yet there is currently no effective treatment available for both the early and late stages of osteoarthritis. Cartilage regeneration requires the action and prolonged retention of multiple drugs at injured sites to recruit endogenous cells and facilitate cartilage formation. Here, we propose a cartilage-binding-peptide-modified lipid nanoparticle as a drug carrier to achieve sustained release of protein (TGF-β3) and small molecular drugs (KGN) for one month. Through systematic screening of multiple peptides targeting collagen II or chondrocytes, we identify a decorin-derived-peptide-modified lipid nanoparticle with precise targeting and prolonged retention capability in cartilage. Improved nanoparticle stability, high drug loading, and sustainable dual-drug release are achieved through interbilayer cross-linking of adjacent lipid bilayers within multilamellar vesicles. In a surgical model of rat OA, the nanoparticle loading with TGF-β3 and KGN protects injured cartilage from degeneration progression. For severe cartilage injury (full-thickness defects) in a rabbit model, the nanoparticle facilitates the regeneration of high-quality hyaline-like cartilage, which is a rare achievement in full-thickness cartilage regeneration through nanoparticle-based drug delivery. This work presents a strategy for the rational design of bioinspired cartilage-binding peptide-modified lipid-based drug carriers to promote hyaline-like cartilage regeneration.